Time Warner Cable Sacks CBS
And the blackout goes beyond the TV screen: CBS has also blocked online streaming of full-length episodes of shows for Time Warner subscribers on CBS.com.
Talks broke down between CBS and Time Warner after an extended negotiating period that lasted weeks beyond the initial deadline for a new contract. Both sides have proven unwilling to compromise, and now, with the National Football League (NFL) regular season on the horizon (CBS is one of three networks that broadcast NFL games), the clock has run out.
CBS said in a press statement that "this is the first time in history that CBS has been dropped from a cable system."
The network also accused Time Warner of "indulging in pointless brinksmanship" and distorting CBS demands with the fictional claim that the broadcaster was asking for a 600 percent increase in retransmission fees.
Time Warner pleaded its case in a counter-statement by stating: "If we paid CBS what they are asking, the next broadcaster or programmer would ask us -- and others like FiOS, AT&T and DirecTV -- for even higher prices next time. Cable TV bills would skyrocket. You'd be mad. We'd be mad. It won't end well for anyone."
The fight between CBS and Time Warner is a proxy war for every broadcaster and pay-TV provider in the U.S. Broadcast networks are feeling squeezed because of new competition for advertising dollars and new technologies that threaten both advertising and retransmission revenue. (See Court Deals Broadcasters Dish DVR Blow and Free TV Model Under Threat.)
Pay-TV providers, meanwhile, are angry about their lack of leverage in licensing negotiations. Without the ability to threaten blackouts, operators believe they won't be able to clamp down on rising programming costs. DirecTV Group Inc. issued a statement in support of Time Warner on Friday.
There is a lot of money at stake for everyone. Last year, CBS President and CEO Les Moonves called US$250 million a conservative estimate for quarterly retransmission revenue. (See TWC, CBS Fan Retransmission Flames.)
Some analysts are suggesting that the current fight could last into September when the NFL regular season is scheduled to start. At that point, it's assumed that CBS and Time Warner will come to some sort of agreement in order to avoid the wrath of football fans around the country. The theory is that with football on the line, eventually somebody is going to have to play ball.
— Mari Silbey, special to Light Reading Cable